In short. At DIAC, mediation doesn't start a new case. It pauses the one you're in. Once the arbitration has commenced, both sides can jointly ask the tribunal (or the DIAC Coordinator, if there's no tribunal yet) to keep things in abeyance while they mediate with someone they pick, and that can be a mediator from the Delhi High Court Mediation and Conciliation Centre panel. Settle, and the tribunal records it as an award. Fail, and the arbitration carries on with nothing said held against you. Put the period and the mediator in writing first.
Is this your situation?
- Three hearings into your DIAC case, you're starting to think a sensible outsider could get both sides to a number.
- The arbitrator looked up at the last sitting and asked if anyone had thought about mediation. Nobody on your side had an answer.
- There's a clause in your contract that says mediate first, arbitrate later, and you're not sure if anyone actually has to.
- You'd like to keep supplying this customer. You just can't agree the figure across the table.
- Your Section 9 or Section 11 petition is listed in the Delhi High Court and the judge has suggested mediation.
- Your MD thinks offering to mediate makes you look desperate, and worries anything you concede will turn up in evidence.
- Accounts wants to know what happens to the hearing dates and the DIAC fee if the case is paused.
How DIAC mediation works, in short
There's no separate mediation case. What you get is a pause inside the arbitration you've already got. Under Rule 29.1 of the DIAC (Arbitration Proceedings) Rules, 2023 (the DIAC Rules), once the arbitration has commenced, the parties can ask the tribunal at any stage to put the proceedings on hold so they can try to settle. Rule 29.2 says who gets the request: the tribunal, or the DIAC Coordinator if the tribunal isn't in place yet. And Rule 29.3 says the tribunal shall accept it and keep the arbitration in abeyance. No discretion there.
Then you pick a mediator. Rule 29.4 lets the parties appoint anyone they like, and that includes people on the panel of the Delhi High Court Mediation and Conciliation Centre, which sits in the High Court and which most lawyers just call Samadhan. Everything in the mediation stays confidential. If it fails, none of it comes onto the arbitration record (Rule 29.5). If it works, the settlement goes to the tribunal, which handles it under Rule 30, normally by recording it as an arbitral award on agreed terms under Section 30 of the Arbitration and Conciliation Act, 1996 (the Act). One more rule. The mediator can't later sit as your arbitrator unless both parties say so expressly in writing (Rule 29.7).
Before the arbitration commences, Rule 29 doesn't apply. You can still mediate by agreement, though, and some contracts insist on it. We deal with both stages below.
The rules you'll be working with
Rule 29, DIAC (Arbitration Proceedings) Rules, 2023
Read it clause by clause. 29.1: after commencement, the parties can ask the tribunal to put the case on hold to settle it amicably. 29.2: the request goes to the tribunal, or to the Coordinator if there's no tribunal yet. 29.3: the tribunal shall accept it and keep the proceedings in abeyance. 29.4: the parties can appoint a mediator of their choice, including one from the Delhi High Court Mediation and Conciliation Centre panel. 29.5: the mediation is confidential and isn't brought on record if it fails. 29.6: a settlement agreement is placed before the tribunal, which then acts under Rule 30. 29.7: the mediator can't act or carry on as arbitrator unless the parties expressly agree in writing. Short rule. It covers most of what you need.
Section 30, Arbitration and Conciliation Act, 1996, and Rule 30, DIAC Rules
The Act doesn't treat settlement as the enemy of arbitration. If the parties agree, the tribunal can use mediation, conciliation or other methods to encourage a deal. Once they settle, the tribunal ends the proceedings and, if asked and it has no objection, records the settlement as an arbitral award on agreed terms. That award has the same status and effect as any other and can be enforced under Section 36.
Section 21, Arbitration and Conciliation Act, 1996
The arbitration commences on the date the respondent receives a request to refer the dispute to arbitration. You'll want that date for limitation. You'll also need it for Rule 29, which only kicks in after commencement.
Mediation Act, 2023
This is the general law on mediation. It covers pre-litigation mediation by agreement and confidentiality, and it lets a signed mediated settlement be enforced like a court judgment, open only to a narrow challenge. It's been brought into force in stages, so check where things stand before you count on its enforcement route. In a pending arbitration we'd still go for a Section 30 award on agreed terms. It's simpler.
Section 12A, Commercial Courts Act, 2015
Mandatory pre-institution mediation applies before you file a commercial suit in court. It doesn't apply to arbitration. If you've got an arbitration clause, you don't need Section 12A mediation before starting, though your contract might ask for some other step first.
Can you mediate before the arbitration starts?
Yes, if both sides agree. It just won't be under DIAC's Rule 29. Two timing questions tell you which set of rules you're under. One: under Section 21 of the Act, the arbitration commences when the respondent receives the notice invoking arbitration. That can be weeks before anyone files a Request at DIAC. From that moment the arbitration has technically begun, and Rule 29.2 lets a mediation request go to the Coordinator even though no tribunal exists. Two: before that notice, there's no arbitration at all. You're two businesses agreeing to mediate a commercial quarrel, nothing more.
In that early stretch you've got a few options. You can hire a private mediator you both pay. You can use an institutional mediation under the Mediation Act, 2023 framework, where it's available. Or, if there's a related case in court, you can mediate through the court. Nothing stops you agreeing on someone from the Delhi High Court Mediation and Conciliation Centre's panel at that stage either. Whether the Centre will itself administer a privately referred matter is another question. Ask it directly.
Watch the dates. A private mediation before the notice doesn't stop limitation running under the Limitation Act, 1963. If your claim is getting close to three years old, send the notice invoking arbitration first. That commences the arbitration and fixes the limitation date. Mediate afterwards. Our guide to limitation for recovery of money walks through the three-year rule.
Your contract says mediate first, then arbitrate. Does it bind you?
A lot of contracts drafted in Delhi NCR now have tiered clauses. Senior management talks for 15 or 30 days, then mediation, and only then DIAC. Whether a court or tribunal will treat those steps as compulsory comes down to the words. Clear, mandatory language with a fixed period tends to be enforced. Loose wording about trying to settle amicably is often treated as directory, which means skipping it won't by itself stop the arbitration. Indian courts have gone both ways on this. Check the current position against the exact words of your clause.
Our advice is dull but safe. Comply, and keep proof. Write to the other side proposing mediation the way the clause describes, give it the period it sets, and record what happened in writing. If they ignore you, that letter answers any objection later. Are you the respondent, and did the claimant skip a mandatory step? Then the objection goes to jurisdiction or admissibility, and you must raise it no later than your statement of defence under Section 16(2). Don't sit on it and complain after the award.
If limitation is tight, a claimant can do both in one letter: send the notice invoking arbitration, propose mediation, and say plainly that the notice protects limitation and you'll mediate in good faith for the period the clause gives. Tribunals generally take that well.
What is the Delhi High Court Mediation Centre, and where does DIAC come in?
The Delhi High Court Mediation and Conciliation Centre (Samadhan) is the High Court's own court-annexed mediation centre. It's not part of DIAC, though both work under the High Court's supervision. Most of what Samadhan handles is referred to it by the courts, and its panel is mostly trained mediators from the Bar. Rule 29.4 of the DIAC Rules lets parties in a DIAC arbitration choose a mediator from that panel. Handy, if you don't already have a name in mind.
There's a second way in. Suppose you've got a Section 9 petition for interim measures, or a Section 11 petition to appoint an arbitrator, pending in the Delhi High Court. The court can, if both sides consent, send you to the Centre for mediation. A deal there can settle the court matter and the arbitration in one go. But if a DIAC arbitration is already running, take the settlement to the tribunal as well, so the arbitration closes with a consent award or a termination order. Don't leave it hanging.
The cost of court-referred mediation at Samadhan isn't the same as a privately appointed mediator's. DIAC's fee rules don't fix a mediator's fee. Ask the Centre or the mediator what they charge now, before you agree, and put the split in writing.
Mediating during a DIAC arbitration, step by step
This is how it normally runs once both sides have said yes in principle.
Agree it, and write it down
Swap short letters or emails agreeing to mediate. Name the mediator or describe the kind of person you want, and set out the period and how the fees will be split. No written agreement means no joint request. And Rule 29.3 only works on a joint request.
File the joint request
Send a joint application to the tribunal under Rule 29.1, or to the Coordinator if there's no tribunal yet, copied to DIAC at the same time. Ask for abeyance for a fixed period, and ask that the timetable restart on its own on a stated date if nobody reports a settlement.
Get the abeyance order
The tribunal records the request and puts the case on hold. Read what the order says about pending deadlines, any deposit due, and the Section 29A timeline. If it says nothing, ask.
Appoint the mediator
Check the mediator is free, agree the fee and get a conflict disclosure. If you've gone to the Delhi High Court Mediation and Conciliation Centre panel, follow the Centre's process. Send the mediator a short joint note on the dispute and the pleadings so far.
Prepare, and turn up properly
Each side sends the mediator a private note on how it sees the case, what it needs and what it can't do. Most mediations mix joint sessions with private ones, where the mediator talks to each side alone. Bring someone who can actually sign off a deal.
Sign the deal straight away
Once terms are agreed, sign a settlement agreement that day if you can. Cover the amount, dates, what happens on default, costs, deposits, and withdrawal of related cases.
Go back to the tribunal
Under Rule 29.6 the agreement goes to the tribunal, which acts under Rule 30, usually by making an award on agreed terms under Section 30 of the Act. If talks fail, tell the tribunal jointly. The timetable picks up again.
How long mediation takes in a DIAC case, and what it costs
| Stage | Usual time | Costs (lawyer fees not shown) |
|---|---|---|
| Agreeing to mediate and filing the joint request (Rule 29.1) | A few days, up to two weeks | DIAC charges nothing for the request itself |
| Abeyance order (Rule 29.3) | Normally at the next sitting, or on the papers | Nothing new; existing deposits and earlier demands stay as fixed unless the Centre says otherwise |
| Appointing the mediator | One to three weeks | The fee you agree with the mediator, or the Delhi High Court Mediation and Conciliation Centre's charges; check today's figures |
| Mediation sessions | Two to six sessions across four to eight weeks is common; tangled disputes take longer | Mediator's fee, a venue if it's private, travel for managers or witnesses |
| Settlement agreement | Same day as the deal in principle, or within the week | Stamp duty under state law where it applies; check before you sign |
| Award on agreed terms (Section 30) | Usually one or two sittings after the agreement is filed | Tribunal's fee for the stage reached under Schedule F; at least one third of the total fee if you settle before the claimant's evidence is complete |
| Talks fail and the arbitration restarts | On the resumption date in the abeyance order | The mediator's fee isn't refunded; arbitration costs carry on as before |
DIAC's published arbitration fee schedule runs on the sum in dispute. Mediators' fees sit outside it. If the arbitration continues, our guide on paying DIAC fees and what happens when you miss a deposit explains deposits. Our own fees are separate. We talk about them at the first meeting and agree them in writing, stage by stage.
Who should mediate? And can it be the arbitrator?
Pick someone both sides will actually listen to. In a construction or engineering fight, that might be a mediator with a technical background or years around those contracts. In a supply or distribution dispute, maybe a senior advocate or a retired judge who's done commercial work. The CV matters less than this: can the person tell each side, in private, where its case is thin? Ask anyone you're considering to disclose past dealings with either party or its lawyers.
Section 30 of the Act does allow the tribunal itself to mediate if the parties agree. We'd steer you away from it. A mediator hears private admissions and bottom lines. An arbitrator who's heard all that and then has to decide the case when talks collapse is in an awkward spot, and the side that loses may cry bias later. DIAC's rule reflects that. Under Rule 29.7 the mediator can't act or carry on as arbitrator unless the parties expressly agree in writing. Almost always, use a separate mediator.
When a client agrees to mediate, Advocate B.K. Singh insists the abeyance order carry a resumption date, a day on which the arbitration timetable restarts by itself if no settlement has been filed. Without one, a mediation that has quietly died can leave the case drifting for months. Each side waits for the other to write to the tribunal. Nobody does.
What happens to the timetable, the Section 29A clock and your deposits?
Abeyance stops the procedural timetable. The statutory clocks are another matter. Section 23(4) of the Act sets a six-month target for pleadings, and Section 29A says the award must come within twelve months of pleadings closing, extendable by six months by consent and after that only by the court. Rule 29 doesn't say time spent in abeyance is left out of those periods. So if you're going to mediate for two months, think about recording your consent to extend under Section 29A(3) in the same joint request, so the tribunal isn't squeezed later. If the extended period runs out as well, you'll need to apply to the court. Our guide on how long a DIAC arbitration takes sets out how Section 29A works.
Deposits are separate. A deposit demand that's already gone out doesn't lapse just because the case is paused, and Rule 33.5 allows a claim or counter claim to be terminated if the deposit isn't paid within 30 days of the due date. If a deposit falls due while you're mediating, pay it, or get the Centre to confirm in writing that the date has moved. Don't assume.
Limitation usually isn't a worry once the arbitration has commenced. The Section 21 date fixes it. It only matters if the arbitration is later terminated and you have to start again.
Is what you say in DIAC mediation confidential?
Yes. Rule 29.5 keeps the mediation confidential and off the arbitration record if it fails. Offers, concessions, admissions made to the mediator, the mediator's own views: none of it should surface later in pleadings, evidence or argument. If the other side tries, object immediately and cite Rule 29.5.
But confidentiality covers the mediation, not every conversation around it. Say your sales head emails their purchase manager, outside the mediation, admitting a delivery was late. That email may still be evidence. While talks are on, send settlement messages through counsel or the mediator, mark written offers without prejudice, and keep your staff out of side chats on WhatsApp.
Documents are trickier. A relevant document that already exists doesn't become privileged because you showed it to the mediator. If the other side hears about it in mediation, it can ask for it through ordinary disclosure in the arbitration. Show the mediator what helps a deal. Assume your core business records may have to be produced anyway.
When DIAC mediation is worth a try, and when it's a waste of time
It works best where the fight is really about numbers and not principle, where both sides want to keep doing business, where the debtor can pay but not in one lump, or where claim and counter claim are each partly right. Multi-party disputes are another good fit. Think of a main contractor, a subcontractor and an employer, where separate arbitrations can never produce a three-way deal. Timing matters too. The sweet spot is after pleadings close and documents are exchanged, when each side has seen the other's case and has a feel for the risk, and before evidence, when costs and the tribunal's fee release jump.
It's a poor bet when the other side has no money, no authority or no interest, and is using mediation to buy time. It's also the wrong first move if you need urgent protection, say to stop a bank guarantee being encashed or assets being sold. Get interim measures under Section 17 or from the emergency arbitrator first. Talk later. Our guide on interim relief in a DIAC arbitration covers the options. And disputes with fraud allegations or criminal complaints in the background rarely settle until the criminal side is dealt with.
Before the first session, Advocate B.K. Singh has the client sign a one-page note with three figures on it: the amount it would be pleased with, the amount it would accept, and the point where it walks away and goes back to the arbitration. Settlement authority that lives only in someone's head tends to move under pressure. We've seen it happen.
What to get ready before a DIAC mediation
Your own file
- The contract, purchase orders, invoices and the ledger statement
- Whatever pleadings have been filed in the arbitration so far
- An honest view of your case from your lawyer, weak points and all
- Your settlement range and walk-away figure, signed off internally
- A board resolution or authority letter for whoever is attending
What the mediator needs
- A short joint note on the dispute and where the arbitration has reached
- Your own confidential note: what matters to you, what doesn't, and what's tying your hands
- Only the documents that count, not the whole record
- A schedule of what's claimed and counter claimed, with the interest worked out
For signing on the day
- A draft settlement term sheet with blanks to fill in
- Bank details, and a format for the payment schedule
- Every related case that'll need withdrawing: court petitions, cheque cases, MSME references
- Your accountant's view on GST, TDS and stamp duty
An invented example: a Noida packaging unit mediates mid-arbitration
This example is made up. A corrugated packaging manufacturer in Noida has sold cartons to a household products distributor in Karol Bagh for six years. A row over rejected consignments ends with the manufacturer starting a DIAC arbitration for Rs 62 lakh. The distributor counter claims Rs 25 lakh, saying damaged cartons lost it shelf space with a retail chain. Pleadings take seven months to close.
At the next sitting the tribunal asks about settlement. Both owners would rather keep trading. Through counsel, the distributor lets slip that cash flow, not liability, is the real problem. The parties file a joint request under Rule 29.1 for eight weeks of abeyance and choose a mediator from the Delhi High Court Mediation and Conciliation Centre panel. They record consent to extend time under Section 29A(3) and get the Centre to confirm no deposit falls due in those weeks. The abeyance order names a resumption date.
Three sessions in, the mediator has the distributor accepting most of the rejected consignments as delivered, and the manufacturer giving a discount on two disputed lots. They settle at Rs 47 lakh in six monthly instalments. The counter claim goes. If two instalments are missed, the full Rs 62 lakh with interest falls due. They sign that afternoon and file it under Rule 29.6, and the tribunal records it as an award on agreed terms. The manufacturer keeps its customer. It also has an award it can execute if the money stops.
How DIAC mediation plays out for different businesses
- Suppliers and contractors chasing payment. It's most useful once the buyer has seen your papers and its counter claim has been tested on paper. Ask for a consent award with a default clause. Not a side letter.
- MSMEs. If you're a registered micro or small supplier, the MSME Facilitation Council route under Section 18 of the MSMED Act, 2006 has a conciliation stage of its own before arbitration. Our guide on DIAC versus the MSME Council compares them.
- Startups and service firms. You can end the case before the costly evidence stage. Ask for video sessions so your founders aren't stuck in a room all day.
- Public sector bodies. The officer who attends usually needs a competent authority's approval to settle. Build that approval time into the abeyance period, and ask the other side to do the same.
- Family businesses and old partners. When relatives or ex-partners fall out, the real issue is often something the contract never mentions. A mediator can deal with that. A tribunal can't.
- Foreign parties. Sessions can run online across time zones, and a consent award from a Delhi-seated arbitration is enforced in India like any domestic award.
Mistakes that sink a mediation or make it backfire
- No resumption date. If the abeyance order doesn't say when the timetable restarts, the case just drifts.
- Nobody in the room who can say yes. A manager who has to phone the owner for every figure kills whatever momentum the mediator builds.
- Forgetting Section 29A. Two months of talks can leave the tribunal short of time unless you've both consented to extend.
- Missing a deposit. Putting the hearings on hold doesn't automatically push back a deposit due date under Rule 33.5.
- Asking the arbitrator to mediate. You're inviting a bias argument later, and under Rule 29.7 the mediator can't carry on as arbitrator without express written agreement.
- Shaking hands now, drafting next week. Sign before anyone leaves the room. Second thoughts arrive overnight.
- Settling quietly and withdrawing. A side agreement plus a withdrawal leaves you holding a contract. A Section 30 award, you can execute.
After mediation: a consent award, or back to the arbitration
If it works, the signed agreement goes to the tribunal under Rule 29.6. The tribunal acts under Rule 30 and, if you ask and it has no objection, records the settlement as an award on agreed terms under Section 30 of the Act. Once the challenge period is over, that award is enforced as a decree of the court under Section 36. Drafting the terms, handling instalments and default, and sorting out costs and deposits on settlement are all in our guide on settling a DIAC arbitration. Execution is covered in enforcing a DIAC award.
If it doesn't work, tell the tribunal jointly, or just let the resumption date come round. The arbitration restarts where it stopped. Nothing from the mediation goes on record. And it isn't wasted. Each side usually walks out with a clearer picture of the other's case, and plenty of disputes that don't settle in the room settle a few months later on much the same terms. If you want help taking a DIAC case to an award or a settlement, see our DIAC arbitration lawyer service.
What to do this week
If your DIAC case is already running, look at the stage it's at. Are the next few months a sensible window? Usually that's after pleadings and before evidence. If you're inclined to try, work out your settlement range, decide who'll attend, and write to the other side proposing a named mediator or a short list, a period, a resumption date and a fee split. If your contract makes mediation a precondition, send that proposal now and keep proof it went.
About to send or receive a notice invoking arbitration? Decide whether to mediate first, or start the arbitration and mediate under Rule 29. Keep limitation in view while you decide. Our DIAC arbitration practice page explains how we handle both routes.
If you'd like your arbitration papers or a draft settlement looked at before you mediate, or want to know how DIAC and the Delhi High Court are currently handling mediation in arbitration matters, Advocate B.K. Singh's team can be reached through the contact page.
Frequently asked questions
Can one party force the other into mediation at DIAC?
No. Rule 29 runs on a joint request, and the tribunal accepts it because both sides want it. If your contract makes mediation a compulsory step before arbitration, that's a question about the clause, not about Rule 29. A tribunal can nudge you towards settlement. It can't make you.
Does DIAC charge a separate fee for mediation?
DIAC's fee rules don't fix a mediator's fee. You agree the charges with the mediator, or pay the Delhi High Court Mediation and Conciliation Centre's charges if you use its process. Check the current figures before you agree, and settle how the cost is split.
How long can a DIAC arbitration stay on hold for mediation?
Rule 29 doesn't set a limit, so it's whatever period the parties ask for and the tribunal records. Six to eight weeks is common in a commercial dispute. Ask for a fixed resumption date, and keep an eye on the Section 29A timeline.
Can the mediator become the arbitrator if mediation fails?
Only if both parties expressly agree in writing. Otherwise Rule 29.7 bars the mediator from acting or continuing as an arbitrator. Most parties prefer to keep the roles apart, and we agree with them.
Can we mediate online?
Yes, if the mediator and the parties agree. Video sessions are common when managers are in different cities or one side is abroad. Just make sure everyone attending has a private room for the confidential sessions.
Is a mediated settlement in a DIAC case enforceable?
If the tribunal records it as an award on agreed terms under Section 30, it's an arbitral award and can be enforced like a court decree under Section 36. A signed settlement that never becomes an award is only a contract, unless the Mediation Act route applies. Check whether it does at the time.
Does the Delhi High Court refer arbitration disputes to mediation?
Yes. In Section 9 or Section 11 petitions, the court can send the parties to its mediation centre if they consent. A deal there can end both the court case and the arbitration, but if an arbitration is already pending, put the settlement before the tribunal too.
Will proposing mediation make my case look weak?
Not if you propose it on clear terms, with a fixed period and a resumption date. Tribunals and opponents see mediation as normal commercial practice. What does look weak is turning up with nobody who can settle.
Advocate B.K. Singh
Founder of B.K. Singh & Associates. MCA, LL.B., LL.M. More than twenty years in practice before the Supreme Court, the Delhi High Court, district and commercial courts in Delhi NCR, and tribunals.
This guide explains the law in general terms and is not legal advice. For advice on your own papers, contact the team.